Congressional negotiations to end a US fiscal crisis have broken down in the House of Representatives and are now in preliminary stages in the Senate.
Lawmakers are scrambling to put hundreds of thousands of federal employees back to work after their failure to fund the government resulted in a partial shutdown on 1 October.
They also are staring down a 17 October deadline, when the Treasury Department has warned the United States could default on its debt for the first time in history unless the nation's borrowing limit is raised by then.
Senate Majority Leader Harry Reid, a Democrat, laid down tough markers not long after he held an initial session with Senate Republican leader Mitch McConnell, Reuters reports.
"We need to have compromise but we are not going to do that until the government reopens and we pay our bills," he warned.
Senator Reid dismissed a Republican senator's plan to extend the US debt limit until 31 January and to fund the government for another six months.
That plan had given some moderate lawmakers hopes for a quick deal, but Democrats said it was saddled with too many objectionable add-ons.
The "preliminary" Reid-McConnell negotiations were launched one day after President Barack Obama rejected a proposal by House Republicans for a short-term increase in the debt limit to 22 November.
Democrats warned that such a small increase in borrowing authority would simply lead to another round of bitter confrontations in Congress and could choke off consumer confidence just as the Christmas buying season would be getting underway.
The flurry of action in the Senate came as House Speaker John Boehner informed his fellow Republicans in a private meeting that the White House had rejected its proposals and it was likely there would be no more ideas delivered to President Obama now that attention was shifting to Senate negotiations.
Meanwhile, the World Bank has warned of grave consequences for the global economy if politicians in the United States fail to increase the government's borrowing limit.
World Bank president Jim Yong Kim called on Democratic and Republican leaders to agree and to do so quickly.
"We're now five days away from a very dangerous moment, the closer we get to the deadline the greater the impact will be for the developing world, inaction could result in interest rates rising, confidence falling and growth slowing."
The BBC reports the concern is that if the US ran short of cash it might default on its debts in the financial markets and that would cause a shock which would reverberate throughout the international financial system.
